Tax for Poverty Reduction - PowerPoint PPT Presentation

Tax for Poverty Reduction. Max Everest-Phillips DFID London HMRC conference 21 September 2009. OUTLINE. Development and Taxation What Have We Done? What Have We Learnt? Tax and: Economic Development Growth Global Trends Tax Administration Governance What we are doing.

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Taxes, if designed well, can promote economic growth, lessen extreme inequalities, tackle climate change and fund the delivery of the MDGs, significantly improving the lives of all citizens and especially poor people.

Tax is a core part of state-building

Fair and transparent tax collection demonstrates good governance and shapes government legitimacy by

promoting accountability of governments to tax-paying citizens, and by

stimulating effective state administration and good public financial management.

Taxes shape investment and economic growth: tax revenues that increase with economic growth ensure sustainable funding of essential public services for poor people: ‘public goods’ such as security, health and education on which economic growth and social development depend.

Gender issues around taxation poorly understood

Anti-corruption, rent-seeking and tax evasion closely inter-connected with weak governance; anti-corruption strategies only work where states can effectively tackle tax evasion and corrupt tax expenditures, through ‘social contract’ of accountability between citizen and state.

Tax is central to the ‘Monterrey Consensus’ by which developing countries committed themselves to deliver ‘effective, efficient, transparent and accountable’ taxation systems, in return for increased international development assistance. Developing countries must be able to show their serious intent to maintain this commitment.

Evidence of partner countries’ ‘tax effort’ matters for sustaining public support in OECD countries for international development.

Aid effectiveness concerns that aid can become a ‘resource curse’, undermining the accountability between state and taxpaying citizens.

Improving tax systems is essential to maintain public finances during the current financial crisis.